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Fiat Chrysler (FCAU) to Go For Magneti Marelli Spin-off

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Fiat Chrysler Automobiles N.V. (FCAU - Free Report) intends to part with its components business Magneti Marelli and distribute shares to Fiat’s shareholders. The decision to separate Magneti Marelli, the diverse components supplier which is engaged in lighting powertrain and electronics, is in sync with the five-year business strategy that the company is set to unveil on Jun 1, 2018.

The move is expected to aid the Italian-American auto giant to concentrate on its core business. This will also provide the components business with the necessary operational flexibility to grow in future.

The spin-off of Magneti Marelli, which employs around 43,000 people and has operations in 19 countries, is likely to be completed by the end of 2018 or in early 2019. The shares of the company are likely to be listed on the Milan stock exchange. However, completion of the spin-off is subject to certain tax and legal considerations as well as regulatory approvals.

Fiat Chrysler Automobiles NV operates as an international automotive company, engaged in designing, engineering, manufacturing, distributing and selling vehicles, components and production systems. In March 2018, the auto giant reported 13.6% growth in year-over-year sales to 216,063 units of vehicles in the United States. The company’s soaring 44.7% sales from the SUV Jeep brand impressively pushed the metric up.

Over the past six months, shares of Fiat Chrysler outperformed the industry it belongs to. Over this time frame, shares of the company grew 25.4%, while the industry inched up 1.1%.

Fiat Chrysler currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

A few other top-ranked stocks in the auto space are General Motors Company (GM - Free Report) , Toyota Motor Corporation (TM - Free Report) and Allison Transmission Holdings, Inc. (ALSN - Free Report) , each sporting a Zacks Rank #1.

General Motors has expected long-term growth rate of 8.4%. The shares of the company rose 10.9% in the past year.

Toyota has expected long-term growth rate of 6.1%. The shares of the company advanced 18.3% in the past year.

Allison Transmission has an expected long-term growth rate of 10%. Past year, shares of the company returned 8.5%.

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